The senators claim in 2008, the Federal Reserve Bank of New York, where Geithner was serving as president, raised concerns about LIBOR (London Interbank Offer Rate) but did nothing to solve the problem of the rate’s dominance in U.S. financial markets, nor did he alert the American public to potential fraud.

That decision “has contributed to emerging litigation that threatens to clog our courts with multi-billion dollar class action lawsuits and losses on interest rate swaps by local, municipal and state governments, which may also lead to more lawsuits,” the two Midwestern senators wrote in the Oct. 2 letter. The two called the flood of lawsuits expected over LIBOR manipulation “the new asbestos.”

Geithner’s lack of response to the problem, and resulting losses for state and local governments, will force Americans to either pay higher taxes or experience a reduction in services, Grassley and Kirk claim. Additionally, continued lack of action and the threat of future LIBOR scandals place U.S. investors and governments at risk.

The two request the Treasury Department answer questions that would “help prevent another crisis,” including an estimation of the increased debt burden state and local governments face as a result of LIBOR price rigging, why Geithner didn’t consider the burden when choosing not to take action on suspected price fixing, and why the Treasury Secretary didn’t anticipate litigation risk as a consequence.

Lawmakers and regulators in England are debating how to repair LIBOR’s tarnished image. The conservative Labour Party at its annual conference Tuesday called for an economic-crime law to help prevent future financial scandals.